Iran: A Welcome Burst Of Sanctions

As the controversies besetting the Obama administration continue to grow in number and intensity, the prospect that President Obama would seriously consider military action against Iran, should that country continue its drive to become a nuclear power, becomes more and more remote. So we welcome the current enhancement of sanctions against Iran on the federal and New York State levels.

It is true that governments in the past have resorted to war as a device to rally public support. But we sense this is not this president’s preferred course of action, nor is the threat to his office all that manifest.

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In addition, if one accepts the prevailing wisdom that the Western powers are hesitant to oust Syria’s President Assad because of their experience in driving Libya’s Khaddafi from power – an effort that unleashed jihadism and sectarian violence and created even greater instability – one would have to believe there is an even greater reluctance to resort to military force with Iran.

Two weeks ago a bipartisan group of U.S. senators introduced legislation that would deny the Iranian government access to its foreign exchange reserves located in the banks of other countries (estimated to be worth approximately $100 billion). The legislation would impose severe penalties on any foreign financial institution that conducts foreign exchange transactions on behalf of Iran. The bill’s lead sponsors, Senator Mark Steven Kirk, an Illinois Republican, and Senator Joe Manchin III, a West Virginia Democrat, said in a joint statement that their legislation, the Iran Sanctions Loophole Elimination Act, would address the problem of Iran being able to tap into its foreign reserves and thereby mitigate the effects of the sanction regime already in place.

In New York, a bill was recently introduced that would prohibit domestic insurers from including on their financial statements investments in companies that engage in investment activities in Iran. These financial statements are relied on by the state to determine whether the company is solvent and able to pay claims. The bill’s lead sponsor, Assembly Speaker Sheldon Silver, said that while he “hope[s] this legislation further encourages divestment in Iran, it is my primary purpose to protect policyholders by making certain that the investments of our domestic insurers are financially sound…. Investments in a nation as volatile as Iran…should never be considered a sound investment.”

Of course, the prospect of military action is what most concerns the mullahs in Tehran and we can only hope Mr. Obama won’t alleviate their worry about just such a prospect. But President Ahmadinejad can read the newspapers just like everyone else.